Yes Bank has planned to steadily increase its presence in retail business. Earlier bank has purposely maintained a low-key presence in the retail market, now is planning to increase exposure in this segment.
Rana Kapoor, managing director and chief executive officer, Yes Bank, stated, “At present, our core strength lies in financing to companies — large, mid-sized as well as small. As far as our retail portfolio is concerned, we deliberately kept it low as there are too many banks providing such services. But as our presence grows, we will start focusing on the retail portfolio”.
When asked is the bank planning to foray into housing loan and car loan segments, Kapoor replied, “We certainly plan to foray into these two segments of retail lending. But before we go for it, we will try to increase our presence in across the country.”
Currently Yes Bank is lending mainly to big companies followed by mid-size companies and the small-scale sector. At present bank’s retail portfolio is merely 1% of its total loan portfolio, including mainly personal loans. In the business segment Yes Bank main focus is on the transportation sector, including roads and railways; power sector, mainly renewable energy; telecom and agri-infrastructure among others.
The bank is also planning to tap the capital market within a year by ensuing public offer, mainly to collect funds for its expansion plan.
The bank is in the process of expansion of its branch network and proposes to open about 130 branches by the end of the next year. Currently bank is having 120 branches and plans to open around 400 more branches by the end of 2012. By 2015, Yes Bank wants to increase the number of branches to 750.
The bank has also decided to hire at least 900 people, including 500 as managerial staff in the present financial year, after which its total employee strength will increase to 3,600. By 2015, bank aims to increase its employee strength by 10,000.
Monday, July 13, 2009
Thursday, July 9, 2009
Banks ask for more time for NPA recast
Banks have asked for more time for the completion of the process of restructuring bad loans.
In the pre-Credit Policy meeting with the Reserve Bank of India officials, banks have requested for extension of the deadline for restructuring of bad loans to December 31. The original deadline was set for June 30.
Dr K. Ramakrishnan, Chief Executive, Indian Banks’ Association, said banks are finding it difficult to complete the restructuring process, as they have to process all proposals received till March-end. Especially loans given in group lending are difficult. Therefore banks have requested the RBI to extend the time till December 31 to complete the restructuring process, he said.
Last year, the RBI prudential guidelines on restructuring of advances were issued for the banks in order to help the industry overcome spill-over effects of the global downturn. The spill-over effects can be seen affecting the economy mainly from September 2008 creating pressure for the otherwise viable units/ activities.
As per the guidelines, special regulatory treatment was extended to commercial real estate exposures restructured for the first time as well as to exposures (other than commercial real estate, capital markets and personal/ consumer loans) which was feasible but were facing temporary cash flow problems and needed a second restructuring.
Bank chiefs who attended the meeting also explained to the RBI that credit growth is limp. However, there is more disbursal in the housing sectors. Funds are being taken by some mid-corporates for capex therefore credit offtake is likely to pick up over the next two quarters, Dr Ramakrishnan stated.
Bankers are positive that the 20 per cent credit growth, as predicted by the RBI in the annual monetary policy, will be achieved by the end of the fiscal.
Bankers have also asked the RBI to review at some of the provisioning norms. For instance, banks have requested for differential provisioning across various segments depending on the security, instead of a standard provisioning.
Banks, in the case of infrastructure projects also, have asked for relaxation in some of the provisioning norms in case the project is not ready on the date of completion. Dr Ramakrishnan pointed out in case the special purpose vehicle of a particular company defaults in a payment, then the whole corporate should not be treated as an NPA. Regarding the interest rate, the RBI has taken note of the periodic rate cuts announced by some banks.
Addressing the presspersons after the meeting, Mr O.P. Bhatt, Chairman, State Bank of India, said, “At the moment, the interest rate scenario is soft. May be for some industry players, softening could take place... small room is there. Six months down the line, when credit growth picks up and all the (government) borrowing takes place, it could stabilise there or harden.”
Dr Ramakrishnan said the RBI has also certain bank chiefs that the additional government borrowing will not put any restriction on liquidity.
Tuesday, July 7, 2009
Govt. offer incentive for farmers of 1% rate cut for timely payment
To control the rising bad loans in banks in agriculture portfolio the government has announced incentives for farmers who have been repaying their dues on time. According to this the reliable borrowers will now pay an interest of 6% instead of 7% on short-term crop loans up to Rs 3 lakh.
Up till now the government had offered an interest rate financial support of 3% on short-term crop loans to farmers. This means it paid banks the difference between the actual loan rate of (10%) and the rate offered to the farmer. Now in the budget this subsidy has been increased to 4%, for which the government has set aside Rs 411 crore
MV Nair, CMD of Union Bank of India and chairman of IBA said, “This was one of the proposals made by the Indian Banks’ Association to incentives farmers who made payments on time, but did not get benefits of the FY09 Budget because the farm loan waiver was mainly aimed at those farmers who had not paid their dues to banks”. However last year Union Bank of India by itself had reduced interest rate by 50 bps to 6.5% for those farmers who repaid loans on time.
On the other hand country’s largest lender, the State Bank of India (SBI), witnessed rise of Rs 3,079 crore in the bad loans in the agriculture sector because of the Rs 71,000-crore loan waiver announced in last year’s Budget. As a result of this even those farmers who were not entitled to the waiver, stopped repaying loans, due to which NPAs for many banks moved up sharply.
AC Mahajan, CMD of Canara Bank, pointed out, “This move will bring more discipline among farmers to pay on time and will also reward prompt payment. This will also send out a message that they should not be misled by vested interests who lead them to believe in gains by non-payment of dues.”
Besides from the increased financial support, the government has also taken decision of extending the deadline for one-time settlement of farmers’ dues. In the last Budget, farmers with over two hectares of land were allotted a time period up to June 30, 2009, to repay 75% of their dues and an exemption for the rest. Now this period has been extended by six months to December 31, 2009.
Moreover to make possible for the students from economically weaker sections to take up higher education, the government has decided to provide full interest subsidy during the period of freeze. Under this loans will be covered taken by these students to pursue approved courses from recognized institutions in India.
Up till now the government had offered an interest rate financial support of 3% on short-term crop loans to farmers. This means it paid banks the difference between the actual loan rate of (10%) and the rate offered to the farmer. Now in the budget this subsidy has been increased to 4%, for which the government has set aside Rs 411 crore
MV Nair, CMD of Union Bank of India and chairman of IBA said, “This was one of the proposals made by the Indian Banks’ Association to incentives farmers who made payments on time, but did not get benefits of the FY09 Budget because the farm loan waiver was mainly aimed at those farmers who had not paid their dues to banks”. However last year Union Bank of India by itself had reduced interest rate by 50 bps to 6.5% for those farmers who repaid loans on time.
On the other hand country’s largest lender, the State Bank of India (SBI), witnessed rise of Rs 3,079 crore in the bad loans in the agriculture sector because of the Rs 71,000-crore loan waiver announced in last year’s Budget. As a result of this even those farmers who were not entitled to the waiver, stopped repaying loans, due to which NPAs for many banks moved up sharply.
AC Mahajan, CMD of Canara Bank, pointed out, “This move will bring more discipline among farmers to pay on time and will also reward prompt payment. This will also send out a message that they should not be misled by vested interests who lead them to believe in gains by non-payment of dues.”
Besides from the increased financial support, the government has also taken decision of extending the deadline for one-time settlement of farmers’ dues. In the last Budget, farmers with over two hectares of land were allotted a time period up to June 30, 2009, to repay 75% of their dues and an exemption for the rest. Now this period has been extended by six months to December 31, 2009.
Moreover to make possible for the students from economically weaker sections to take up higher education, the government has decided to provide full interest subsidy during the period of freeze. Under this loans will be covered taken by these students to pursue approved courses from recognized institutions in India.
Friday, July 3, 2009
Five Indian banks listed among top 1,000 world banks ranking
The trade magazine ‘The Banker’ a part of the Financial Times group that has been carrying the rankings since 1970, has compiled a list of the world’s top 1,000 banks for the year 2009; the five Indian banks have been able to make their position in the list.
Banks capital is the core measure to know about bank’s financial strength that includes largely of shareholders’ capital. The two of Indian banks – State Bank of India is positioned at 64th position and ICICI Bank Ltd is figured at 81st position among the top 100 by tier I capital.
While Punjab National Bank, HDFC Bank Ltd and Bank of India are positioned at 239, 242 and 263, respectively in the list to be published in the July issue of ‘The Banker’.
The latest list is being published after the financial maelstrom faced by the global banking industry last year where the US and Europe governments had to rescue banks by funding them with hundreds of billions of dollars.
As per the magazine records last year banking profits had declined by 85.3% from $780.8 billion in 2007 to $115 billion and return on equity had dropped from 20% to 2.69%.
According to capital strength JP Morgan Chase and Co., Bank of America Corp., Citigroup Inc., Royal Bank of Scotland Plc. and HSBC Holdings Plc. are the top five banks in the list. Among the five top banks, HSBC is the only banks that did not receive any government support.
The Banks which wedged to the basics, taking deposits and lending in their home markets, were the best. Industrial and Commercial Bank of China, followed by China Construction Bank and Spain’s Banco Santander SA attained maximum profits.
In a press statement magazine’s editor Brian Caplen told, “In future banks will be run much more conservatively”. “Regulators will require them to hold more capital and be less leveraged. This will reduce the profits of the industry as a whole but will bring about a safer banking system.”
Banks capital is the core measure to know about bank’s financial strength that includes largely of shareholders’ capital. The two of Indian banks – State Bank of India is positioned at 64th position and ICICI Bank Ltd is figured at 81st position among the top 100 by tier I capital.
While Punjab National Bank, HDFC Bank Ltd and Bank of India are positioned at 239, 242 and 263, respectively in the list to be published in the July issue of ‘The Banker’.
The latest list is being published after the financial maelstrom faced by the global banking industry last year where the US and Europe governments had to rescue banks by funding them with hundreds of billions of dollars.
As per the magazine records last year banking profits had declined by 85.3% from $780.8 billion in 2007 to $115 billion and return on equity had dropped from 20% to 2.69%.
According to capital strength JP Morgan Chase and Co., Bank of America Corp., Citigroup Inc., Royal Bank of Scotland Plc. and HSBC Holdings Plc. are the top five banks in the list. Among the five top banks, HSBC is the only banks that did not receive any government support.
The Banks which wedged to the basics, taking deposits and lending in their home markets, were the best. Industrial and Commercial Bank of China, followed by China Construction Bank and Spain’s Banco Santander SA attained maximum profits.
In a press statement magazine’s editor Brian Caplen told, “In future banks will be run much more conservatively”. “Regulators will require them to hold more capital and be less leveraged. This will reduce the profits of the industry as a whole but will bring about a safer banking system.”
Thursday, July 2, 2009
SBI plans to become leading foreign bank in select nations, Mauritius
After maintaining number one position in India the State Bank of India is planning to be a leading foreign bank in selective nations, including Mauritius.
A senior SBI official informed, "Plans are in place to be the dominant foreign bank in few identified countries such as Mauritius, Singapore and Nepal".
SBI aims to have a major share in India-related business in high potential markets world wide.
He told working on the same line last fiscal the two of the bank's subsidiaries in Mauritius were merged to form a new entity called SBI (Mauritius) Ltd.
To create a new entity SBI (Mauritius) Ltd the bank's two partly owned subsidiaries in Mauritius namely Indian Ocean International Bank Ltd and SBI International (Mauritius) Ltd were merged.
He informed Bank of Mauritius sanctioned the scheme of merger from April 1, 2008.
He added as a result after the merger the SBI's share in SBI (Mauritius) Ltd has reduced from 98 per cent to 93.40 per cent.
Simultaneously, in the Nepal joint venture also SBI increased its share to 55 per cent from 50 per cent earlier.
SBI acquired 5 per cent stake of Nepal SBI Ltd through a competitive bid process from Agricultural Development Bank.
In the previous fiscal year SBI had funded 21 outbound merger and acquisition deals by Indian companies but in 2008-09, bank provided funds for 22 deals.
Moreover SBI is also planning to increase its presence in countries including the UK and the UAE which are having strong links with India.
He said, "Initiatives (are) under way to strengthen business in countries with a strong India linkage like the US, the UK and the UAE".
At present, SBI is having seven branches in the US and about six in the UK and in United Arab Emirates (UAE) the bank is having exchange services.
He told SBI also has a proposal to become a major bank for Non-Resident Indians (NRIs) for their banking needs and added the process is going on to restructure the international business to enable new business model.
In 2008-09, the SBI international credit portfolio grew up by 54 per cent to Rs 86,267 crore from Rs 56,196 crore in the previous year. He pointed out there is considerable credit growth in spite of the global meltdown.
Also, last year bank along with its subsidiaries and joint ventures abroad opened nine offices, as well as full-fledged retail operations in Singapore, last year.
A senior SBI official informed, "Plans are in place to be the dominant foreign bank in few identified countries such as Mauritius, Singapore and Nepal".
SBI aims to have a major share in India-related business in high potential markets world wide.
He told working on the same line last fiscal the two of the bank's subsidiaries in Mauritius were merged to form a new entity called SBI (Mauritius) Ltd.
To create a new entity SBI (Mauritius) Ltd the bank's two partly owned subsidiaries in Mauritius namely Indian Ocean International Bank Ltd and SBI International (Mauritius) Ltd were merged.
He informed Bank of Mauritius sanctioned the scheme of merger from April 1, 2008.
He added as a result after the merger the SBI's share in SBI (Mauritius) Ltd has reduced from 98 per cent to 93.40 per cent.
Simultaneously, in the Nepal joint venture also SBI increased its share to 55 per cent from 50 per cent earlier.
SBI acquired 5 per cent stake of Nepal SBI Ltd through a competitive bid process from Agricultural Development Bank.
In the previous fiscal year SBI had funded 21 outbound merger and acquisition deals by Indian companies but in 2008-09, bank provided funds for 22 deals.
Moreover SBI is also planning to increase its presence in countries including the UK and the UAE which are having strong links with India.
He said, "Initiatives (are) under way to strengthen business in countries with a strong India linkage like the US, the UK and the UAE".
At present, SBI is having seven branches in the US and about six in the UK and in United Arab Emirates (UAE) the bank is having exchange services.
He told SBI also has a proposal to become a major bank for Non-Resident Indians (NRIs) for their banking needs and added the process is going on to restructure the international business to enable new business model.
In 2008-09, the SBI international credit portfolio grew up by 54 per cent to Rs 86,267 crore from Rs 56,196 crore in the previous year. He pointed out there is considerable credit growth in spite of the global meltdown.
Also, last year bank along with its subsidiaries and joint ventures abroad opened nine offices, as well as full-fledged retail operations in Singapore, last year.
Wednesday, July 1, 2009
Andhra Bank launched bank’s new mascot & new corporate slogan
Andhra Bank, a state run lender has introduced a major brand-building plan by promoting a new mascot and also a new corporate slogan with an aim of growing its business to Rs 1.50 lakh crore by September 2010 through its expansion across the country.
Andhra Bank Chairman and Managing Director R S Reddy today launched bank’s new mascot Dolle, a "friendly, intelligent and responsive" dolphin. And 'For all your needs' – with a graphic ‘enter’ key the bank’s new corporate slogan.
At the launch Reddy told reporters, "Our new mascot and the corporate slogan symbolize the value system that Andhra Bank has been known for. We will now spread our wings across the country by opening more branches over the next one year and take the business to Rs 1.50 lakh crore from the present Rs one lakh crore."
Andhra Bank, is having 1,438 branches in India, obtains about 40 per cent of its business from outside Andhra Pradesh. He said, "We already have obtained permission from the Reserve Bank of India for opening 121 new branches and will seek permission for opening 100 more," and added that they have been able to raise Rs 520 crore last week heading towards improvement in capital adequacy to about 13.5 per cent.
Andhra Bank Chairman and Managing Director R S Reddy today launched bank’s new mascot Dolle, a "friendly, intelligent and responsive" dolphin. And 'For all your needs' – with a graphic ‘enter’ key the bank’s new corporate slogan.
At the launch Reddy told reporters, "Our new mascot and the corporate slogan symbolize the value system that Andhra Bank has been known for. We will now spread our wings across the country by opening more branches over the next one year and take the business to Rs 1.50 lakh crore from the present Rs one lakh crore."
Andhra Bank, is having 1,438 branches in India, obtains about 40 per cent of its business from outside Andhra Pradesh. He said, "We already have obtained permission from the Reserve Bank of India for opening 121 new branches and will seek permission for opening 100 more," and added that they have been able to raise Rs 520 crore last week heading towards improvement in capital adequacy to about 13.5 per cent.
Monday, June 22, 2009
Banks take long duration for reimbursement in case of ATMs fault
In case you insert your debit card in an ATM for cash withdrawal but the cash is not dispensed yet the transaction gets debited in your bank account then as per Reserve Bank of India norms, banks should refund such wrongly debited amount within 12 working days. However in reality the process generally takes longer durations if the card has been used at other bank ATM.
A senior banking ombudsman official informed, "Sticking to the 12-day deadline become difficult because there are two banks involved here. Reimbursement may take up to three weeks.'' Most important the official said the amount does not get automatically reaccredited; the customer has to first log a complaint.
Since April the customers has been allowed to use the automated teller machines freely to draw cash from all ATMs across banks without paying any extra charge. After this two problems have risen. One is delay in the reimbursement of wrongly debited amounts and the second is rejection of a card at the ATM of another bank because its software fails to recognize the `foreign' card.
However a senior Mumbai banker, assured, "Initial glitches would be smoothened out once banks change their software (to meet the new requirements)”.
Sanjeev Talwar, banking advisor at the Delhi-headquartered National Consumer Helpline pointed out the problem was severe during April when customers were allowed to use all ATMs across the banks free of charge. Whereas the senior bankers in Mumbai and Delhi informed now the problems aren't as severe anymore, though they have not been eliminated.
In February a consumer-friendly circular on reimbursement from RBI, which pre-dates freeing of ATMs in April, says, "...we have been receiving a number of complaints from bank customers, regarding debit of accounts even though the ATMs have not disbursed cash for various reasons. More importantly, banks take considerable time in reimbursing the amounts involved in such failed transactions to card holders. In many cases, the time taken is as much as 50 days.''
The ombudsman official stated to meet RBI-mandated deadline, "We have asked nodal officers of each bank to work in close cooperation with others to allow for quicker reimbursement.''
Bankers informed faulty ATM transactions can involve connectivity problems. The ombudsman official explained, "When a card is physically present in the ATM, the churn of printing roll is generated, and when there is any transaction, it hits a switch centre and reconciliation of the transaction takes place. If these two proofs are produced, it shows the transaction actually took place.'' But in cases where money is not dispensed, the official added, "We rely on the cash reconciliation statement. Every day or two, the cash which has been put inside the ATM is tallied with what has been actually dispensed. If cash doesn't come out, surplus money would be found in the statement. We take a decision (in a dispute) based on these three things.''
The customers who have to wait longer than 12 days are directed to speak to RBI's customer care department with their complaint.
A senior banking ombudsman official informed, "Sticking to the 12-day deadline become difficult because there are two banks involved here. Reimbursement may take up to three weeks.'' Most important the official said the amount does not get automatically reaccredited; the customer has to first log a complaint.
Since April the customers has been allowed to use the automated teller machines freely to draw cash from all ATMs across banks without paying any extra charge. After this two problems have risen. One is delay in the reimbursement of wrongly debited amounts and the second is rejection of a card at the ATM of another bank because its software fails to recognize the `foreign' card.
However a senior Mumbai banker, assured, "Initial glitches would be smoothened out once banks change their software (to meet the new requirements)”.
Sanjeev Talwar, banking advisor at the Delhi-headquartered National Consumer Helpline pointed out the problem was severe during April when customers were allowed to use all ATMs across the banks free of charge. Whereas the senior bankers in Mumbai and Delhi informed now the problems aren't as severe anymore, though they have not been eliminated.
In February a consumer-friendly circular on reimbursement from RBI, which pre-dates freeing of ATMs in April, says, "...we have been receiving a number of complaints from bank customers, regarding debit of accounts even though the ATMs have not disbursed cash for various reasons. More importantly, banks take considerable time in reimbursing the amounts involved in such failed transactions to card holders. In many cases, the time taken is as much as 50 days.''
The ombudsman official stated to meet RBI-mandated deadline, "We have asked nodal officers of each bank to work in close cooperation with others to allow for quicker reimbursement.''
Bankers informed faulty ATM transactions can involve connectivity problems. The ombudsman official explained, "When a card is physically present in the ATM, the churn of printing roll is generated, and when there is any transaction, it hits a switch centre and reconciliation of the transaction takes place. If these two proofs are produced, it shows the transaction actually took place.'' But in cases where money is not dispensed, the official added, "We rely on the cash reconciliation statement. Every day or two, the cash which has been put inside the ATM is tallied with what has been actually dispensed. If cash doesn't come out, surplus money would be found in the statement. We take a decision (in a dispute) based on these three things.''
The customers who have to wait longer than 12 days are directed to speak to RBI's customer care department with their complaint.
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